By Brian Nelson, CFA
There are a number of ways to evaluate the health of a company’s dividend. We think a minimum threshold for a company’s yield is par for the course in any income-oriented screen, and we think a reasonable dividend yield hurdle rate for this screen may be 2%. For stocks that make this cut, we want to find those that generate free cash flow at a pace that is far larger than the cash paid out as dividends and have a strong balance sheet to boot, or companies that have high Dividend Cushion ratios.
Enter stocks that have the highest multiplicative combination of their dividend yield and Dividend Cushion ratio. To develop this screen, consider excluding the business models of master limited partnerships and real estate investment trusts and focus exclusively on corporates. Make a few other tweaks with respect to business model risk considerations, too. Income investors have a lot to choose from, and this screen could become one of your favorites — it focuses on identifying the financially-healthiest dividend-payers with yields over 2%. Overlay the screen with an Economic Castle assessment to consider business-model risk, too!
How to filter data in Excel? Click here.
Download the screener or build your own screener here (xls).
Important Note: The data and rankings are updated frequently and are current as of the date of this download. Valuentum may have updated the stock and dividend reports of companies after the published date of this download. Members should view the rankings in this download as a starting point for further research and always access the individual stock page of each desired company on our website for its most recent ratings, metrics, and valuation information. If you have any questions about our services, please contact us at info@valuentum.com.
Note on Recent Improvements to the Website
In everything we do, from combining value and momentum into a process at the stock-selection level, to developing the forward-looking Dividend Cushion ratio, which has helped income investors, to expanding upon the concept of the economic moat to establish the Economic Castle rating, everything we do puts INVESTORS FIRST — and frankly, these three metrics barely scratch the surface of what we do and the research and analysis that we continue to incorporate into our work. In the spirit of making our data as useful as possible, we wanted to let you know we’ve made a couple improvements to the website.
The first improvement is that now all generalized stock screens on the website (on the left column, or as in this article) will be a downloadable Excel file, instead of an archived article with a list of stocks. The descriptions of the screens will be the same, but you’ll be able to use that downloadable file to come up with your own screen with the data provided. The information in the downloadable Excel file and the information on our stock pages will be updated at the end of each week such that readers can access the most up-to-date information in either a screen Excel download or on the stock page. Please be sure to access the stock price chart on each stock page for the most recent stock price information, and the valuation analysis behind our fair value estimates can always be found in the 16-page report (please note each stock and dividend report has an ‘as of’ date on them).
The second improvement is related to enhancing website functionality. We’ve invested resources to improve our stock pages, where up-to-date information can be found, so we no longer need lists of company reports on the website, per se. Specifically, we are now doing away with the list of Dividend Reports (on the right column of the website) because we think it makes sense for members to access that information on each company’s stock page, where the most recent stock price chart, company commentary, press releases, its stock report (with valuation analysis), and the dividend report (with Dividend Cushion ratio), among other considerations, reside. There is a tremendous amount of analysis for each company on each stock page. Here is one on General Mills (GIS), for example: